Producers group works to open Chinese market to U.S. rice

Some three years ago, shortly after he'd been hired to run the Arkansas Rice Growers Association, Greg Yielding was offered a trip to China. “My buddy does a lot of business over there and some of the factories asked him to visit,” recalls the affable Arkansan. “He asked if I wanted to make a seriously long road-trip and he'd foot the bill.”

Yielding sensed the offer was a chance, however slim, to make inroads into the massive Chinese rice market. After encouragement from the U.S. Rice Producers Association (ARGA is a partner with the Houston-based USRPA), Yielding readied visas and packed samples of U.S.-grown long-grain rice.

Currently, the United States has no rice market access to China. Few were optimistic he'd make any breakthroughs.

“It's illegal for our rice to be on their shelves. When some sneaks through, the government pulls it.

“But I kept thinking, ‘Man, China is the top rice producer and consumer in the world. Its population is 1.3 billion and growing. They have to eat, they like rice, and why not get U.S. rice in there?’ Even a couple of years ago, there were reports about China's worries about keeping its population fed.”

Yielding first contacted USDA Agriculture Trade Offices for help. USDA has set up ATO offices all over the world, including major Chinese cities.

“The ATO folks in Shanghai set up some appointments. We weren't using any federal money and I walked in there almost blind, just hoping for the best. The ATO fellows were great” and helped set up his first meeting with a major Chinese rice importer. The meeting went well and Yielding vowed to return.

“Before I left, ATO guys said we needed to ask for some Foreign Agriculture Service funds for marketing promotions. They said that would help open the market.

“I thought, ‘Yeah, we need to do some surveys and find out if the Chinese are truly willing to buy U.S. rice. Before going any further with this, expending any more energy, we need to know that.’”

The next step was writing a grant proposal — done largely by the USRPA — and waiting for it to wend its way through the proper USDA channels. It took a year, but through the Emerging Markets Program the proposal was accepted and $37,500 provided. Having continued to expand contacts through the ATOs, USDA's Animal and Plant Health Inspection Service (APHIS) and the U.S. agricultural attaché in Beijing, Yielding was primed.

Promotional funds secure, the first thing was to evaluate whether a market actually exists for U.S. long-grain rice in China — especially in southeastern Guangdong Province, the country's richest. Marketers believe southern Chinese should be more amenable to U.S. long-grain rice because of their proximity to long-grain growing countries like Thailand. Chinese from further north tend to prefer medium-grain varieties.

And with Americans buying so many Chinese-made goods, many in the country are prospering.

“China doesn't have an emerging middle class — it's already viable. Money is all over. Everything we're wearing and using is made there. They're taking our money and improving their living conditions.”

So, back in south China with interpreter in tow, Yielding began visiting grocery stores and making cold calls. “I played it by feel and figured it out as we went along. I found that most of the population doesn't go to grocery stores for their food. They buy from street markets.”

Grocery stores in China are for the moneyed classes.

“I wanted to talk to the folks that run them. I'd find some grocery store and ask the interpreter to find where the head office was. Then, we'd just head over.”

After the first several meetings, Yielding's trepidation melted. “The Chinese are very, very nice and accommodating. The heads of these stores — the very top guys — would meet with me after one call, right off the bat. You could never do that in the United States.

“I'd call and say, ‘Sir, could we meet soon?’ And they wouldn't put me off for a week or two — they wanted to meet that very day. I'd go to them carrying rice samples. It couldn't have gone better.”

If the planned surveys were also positive towards U.S. rice, Yielding figured the grocery stores would be even more accommodating. “If the Chinese want U.S. rice, then we could use that information to open up the markets. And that information would provide impetus for the folks running the grocery stores to sell it — everyone makes money, everyone wins.”

But how does a Southern boy set up in-store promotions and surveys in China? Yielding had no idea how to find a reputable public relations or advertising firm.

While touring a Kroger-like grocery store, he noticed a Nescafé cappuccino promotion going on with several girls in special outfits.

“They were behind a nice booth and handing out samples. I asked the interpreter to ask who they worked for. They pointed at this gentleman standing (on the periphery) watching. Turned out he runs a small advertising company.”

After telling the man what was needed, “he had a proposal ready that afternoon. He was quick. He wanted the business that fell into his lap. And that's what I found all over the country — the Chinese are go-getters. They really work hard.”

Soon, Yielding returned home and over the next few months worked with the advertiser on a booth design and making sure survey questions had been properly translated.

“When I returned to China, it was ready to go. We did the market surveys out of our own grocery store booth and had girls wearing outfits. We had aprons and kitchen towels made up special for it. The aprons and towels say, ‘U.S. rice. Healthy for you.’”

After multiple, big crowd promotions, “we ended up with over 1,000 surveys — a bunch of them. It was constantly busy. At the booth we had music playing and a speaker system. We had a rice cooker and handed out 5-ounce sample cups. Plain rice in a cup — nothing fancy. If they wanted, the customers were also able to really dig into some dry rice, put their hands in it, smell it.”

The Chinese are rice connoisseurs, says Yielding — they know what's good. And the surveys showed, indeed, the Chinese do want high-quality, U.S. number one, long-grain rice.

Among the survey questions:

How often do you prepare rice? Sixty-seven percent answered, “Twice, or more, every day.”

Do you like the taste of this (U.S.-grown) rice? Sixty-two percent said, “Yes.”

Would you pay more for this rice? Sixty-three percent said they would.

The Chinese, it turns out, are very interested in vitamin-enriched rice. And the United States is the only country that adds vitamins to rice. Iron, thiamine, and niacin are added to the rice after it's milled white.

“That's why brown rice is better for you — the brown layer is where all the vitamins are contained. So, the vitamins are added back to white rice via a powder. That's why the label says, ‘Don't rinse or drain after cooking.’”

In the future, when U.S. rice is sold in China, the no washing or draining admonition will have to be played up. The Chinese wash their rice vigorously.

“We're talking about selling them pre-packaged U.S. rice, milled here and vitamin-enriched. That's easier for them. And the Chinese middle class is very health-conscious. They know (U.S.) food regulations are much more stringent.”

Yielding has heard critics of the ARGA/USRPA efforts.

“I've had people tell me, ‘Man, the Chinese won't buy our rice. It would be too expensive.’

“Well, price isn't the only reason you make a purchasing decision. And too many people here don't understand there's plenty of money floating around there. The middle class wants quality — they want good products.”

Grocery store buyers ask Yielding for U.S. rice “constantly. They want the markets open, as well. By the way, we're going to ask China for market access for all types of U.S. rice, not just long-grain.”

Currently, APHIS is playing a key role in opening the Chinese market.

“A pest risk assessment is required. What kind of pests might be brought into a country through exports? That report can take two or three years to get done. That's prudent and normal.”

However, Yielding and colleagues aren't proposing shipping rough rice into China. Therefore, the approval process should take much less time.

In a May 6 letter to his Chinese counterpart, Craig Fedchock, APHIS assistant deputy administrator wrote, “The potential for field or storage pest infestation in packaged rice is virtually nonexistent.”

Another issue is simple fairness. Many Americans have no idea that Chinese-grown rice is imported into this country. The APHIS letter points out that between 2003 and 2007, $119 million worth of Chinese rice was imported into the United States.

There is “no doubt, the Chinese are ready to do this,” says Yielding. “This is exciting! People ask me what the market potential could be. Honestly, it could be whatever we want it to be.”